Stock Market Assignment

Journal One – The Stock Market Game First submission Date 26/10/2009| Table 1|   |   | Company| Shares bought| Share Price| Change| 3i Group| 2000| ? 2. 95| ? 5,900. 00| BP| 2000| ? 5. 65| ? 11,300. 00| Prudential| 4000| ? 6. 33| ? 25,320. 00| Sainsbury’s| 2000| ? 3. 39| ? 6,780. 00| |   |   |   | TOTAL|   |   | ? 49,300. 00| CASH HELD|   |   | ? 50,700. 00| |   |   |   | Original amount|   |   | ? 100,000. 00| Profit/Loss|   |   | 0| I will undertake an analysis of 3i Group. I have already invested ? 5,900. 00 and have bought 2000 shares at the share price of ? . 39. I will be watching my shares closely so that I can make a choice to sell, buy or hold my shares 3i Group Established in the 1945, is one of the UK's biggest investors in private companies, it says its strategy is to go for early stage growth companies rather than the financial wizardry favoured by by other ventured capitalists. It has been a big investor in technology compan ies in the past. The reason why I chose this company is because I followed the advice given to me in lecture to not pick companies that I am familiar with.This chart shows the behaviour of the share price over 6 months. I will undertake an analysis of BP. I have already invested ? 11,300 at a share price of ? 5. 65. The Beta for this company 0. 89 which is less than 1. This means that the security will be less so I may not make a profit on my return so there is a bit of a risk. BP Oil giant BP moved into the bracket of oil companies in the late nineties, with the acquisition of US concerns Amoco and Atlantic Richfield. More geared to oil production and exploration than its main rivals.BP has moved into the former Soviet Union to secure future production as its current key asset in the North Sea and Alaska wind down. The reason why I chose this company was because petrol prices have been going up, at one stage the price for a litre was less than ? 1. So I am taking a risk with this o ne but I am hoping it will turn out that I have made some profit with the choices I have made. This chart shows the behaviour of the share price over 6 months I will undertake an analysis of Sainsbury’s. I have already invested ? 780. 00 at a share price of ? 3. 39. The Beta for this company is 0. 5 again this is less than 1. The security risk is going to be high with this company. I will keep a close eye on the share price if it falls I may have to sell my shares at the right time so I do not make a loss. Sainsbury’s J Sainsbury’s UK supermarket group was originally founded in the Drury lane in London 1869. The group began life as a listed company in 1973 which at the time was UK largest ever flotation the group have moved into financial servicesI chose to invest in this company because the public need to purchase food it is a need not a want. There are many competitors out there such as Tesco and Asda, which would have been an obvious choice for me, but again I thought I would take a risk and go for a company that I do not shop in. I logged on to www. digitallook. com and at the time Sainsbury’s was a top seller, because of this small bit of information I decided I was going to buy some shares from this company. I checked on another day and the shares had dropped, so I thought maybe Sainsbury’s is not the right company to choose.I chose it because it may be going up and down but may end up as a winner. Tesco, Asda and some other competitors were on watchdog about flat packed bikes; this program may affect their Christmas sales. In this entry I will undertake an analysis of Prudential. I have already invested ? 25,320. This is the largest investment I have made but I believe it is the best one and I will make a return on my investment. The Beta for this company is 2. 24 so this proves I will make a return on my investment nevertheless there will be more of a higher risk, that I am willing to take.Prudential Insurance Group P rudential is one of the UK largest life insurers. It has operations around the world, in the UK, US and Asia. As well as providing financial services under its own name the Prudential also owns M+G Investment. I chose this company because I thought it would be a good investment and I will make a profit. I have invested over ? 25,000 in this company as I am hoping to make a good return on my money. With all the companies that I have invested my money in I have set up a profile on www. digitallook. com.I was going to set up a spreadsheet in excel but I noticed on digital look that you can create a profile with how much shares you bought, the date and how much per share. Once this information is entered it will let you know how much money you have lost that day. For the second submission I will not continue with this as I would rather set up a spreadsheet in my reflective log and use different formulae to work out whether I have made a profit or loss. Second submission for the Fantasy Stock Market Game On the 12/11/09 I read in the metro newspaper that Sainsbury's has reported an 18. % rise in profits in the past six months but warned sales could slump in the next half. The grocery chain posted healthy profits of ? 307m after like for like sales rose 5. 7% in the October. Share price rose two percent after the profit figure bettered Sainsbury's emerged as a winner in the recession as it tempted customers away from Tesco and other competitors, this was led by the advertisers (fed family for a fiver). Sainsbury's confirmed that market growth was likely to slow in the future as sales surge comes to an end.According to researchers at Nielsen Sainsbury's sales increase was the lowest out of the big four chains. Sainsbury's face a tougher challenge to maintain the sharp rises in the sales seen over the past year as food prices ease back and are expected economic recovery curves. Sainsbury's are hoping to compete in other areas as food sales came under pressure. I was w illing to take a risk as risk is associated when investing money. On the BBC news Sainsbury's said they will not be able to generate sale growth like last year because of inflation.The share price on the 13/11/2009 was 339. 30p going down by 1. 40p which is 0. 03% decrease. With this information that I found out I decided to sell my shares, luckily I sold my shares on Thursday 12/11/2009 and the share price was again ? 3. 39. I bought 2000 shares this equals to ? 6780. 00. I haven't made a loss as when I originally bought my shares the share price was the same. The other three companies have been doing well since I sold my Sainsbury's shares, the have been up everyday. On the 18/11/09 I had made a profit of ? 380, which I was pleased about.One the 19/11/09 the share prices have fallen, nevertheless I am confident the three companies will make me a profit. Reflective Log Spreadsheet This is a part of my reflective log spreadsheet that I have been keeping so far to show I have been ke eping an eye of my shares, the share prices and whether I am making a profit or a loss. Looking at this Table I have made a loss of ? 240 (3i group) comparison with the original amount I have made a profit of ? 500 with BP and with Prudential I have made a profit of ? 720. Comparison of the chosen companies with their competitors BP CompetitorsChevron and Texaco merged in 2001 creating the 2nd largest US based energy company and the 5th largest in the world. BP have signed their first big oilfield development contract. This should improve their shares, even though they are doing okay, once this contract is finalised I think it will benefit the company in more than one way. Exxon and Mobil completed there merger in 1999 to form what is now the worlds largest publicly traded energy company. Exxon and Mobil is involved in the exploration, production, manufacture, transportation and sale of crude oil, natural gas and petroleum products.The group also manufactures and markets petrochemic als, packaging films and speciality chemicals in more than 50 countries. The company is best known by the consumers as Esso and Mobil brand. Royal Dutch and Shell Transport completed their formal unification under a single new parent company RDS in July 2005. Shell is best known for the exploration and production of oil and natural gas alongside its retail petrol stations across UK. Shell's other operations include petrochemicals that are used for plastic and detergents. The share prices to date for these companies are 26/11/2009Chevron Investment (CDI) $79. 64 Exxon Mobile $76. 47 Royal Dutch Shell (RDS)? 6. 50 3i Group Competitors This company has 2 top competitors Candover Investment and CVC Capital Partners Candover Investment Their objectives is to achieve above average growth in its net assets through capital gains from its investments and to earn satisfactory income for their shareholders CVC Limited This company provide investment is over 70 companies across all industries. This company was incorporated in 1984 and operates in Australia. The share prices to date for these companies are 26/11/2009Candover Investment(CDI)? 4. 95 27/11/2009 Candover Investment(CDI)? 4. 99 CVC Limited? 4. 18 (AUD A$7. 60) Prudential Competitors Prudential have three top competitors they are American International Group, AXA and Met life incorporated Their share to date are 26/11/2009 American International Group (AIG)? 21. 00 Converted this from $34. 68 AXA? 23. 95 Metlife inc. ?20. 96 By looking at this spreadsheet compared to the last submission I decided not to purchase any more shares. I have been continuing to keep an eye on my share prices not every day like when I started this assignment.Nevertheless when I do check them they have been progressively increasing. This boost my confidence that I have made the right choice when selecting the companies to invest in. I will not be selling these shares now. I have bought them and will keep them long term so that I make a p rofit. These three companies are a long investment. Time to time I have had a look at the Sainsbury's shares to convince myself that I made the right decision in selling them. By doing this, this has confirmed my decision as the shares keep falling. The last time I checked them they were standing at ? . 24. Submission 4 Reflective Log What have you learned about the financial markets and, particularly, the stock markets? What are the importances’s of these markets? After reading and research that I have done my understanding of financial markets is as follows; A financial market is a mechanism that allows people to buy and sell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect the efficient-market hypothesis.Financial markets have evolved significantly over several hundred years and are undergoing constant innovation for the improvement of liquidity. Both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded) exist. Markets work by placing many interested buyers and sellers in one â€Å"place†, thus making it easier for them to find each other. An economy which relies primarily on interactions between buyers and sellers to allocate resources is known as a market economy in contrast either to a command economy or to a non-market economy such as a gift economy.Financial markets facilitate: The raising of capital (in the capital markets), the transfer of risk (in the derivatives markets) and International trade (in the currency markets); theses are used to match those who want capital to those who have it. Typically a borrower issues a receipt to the lender promising to pay back the capital. These receipts are securities which may be freely bought or sold. In return for lending money to the borrower, the lender will expect some compensation in the form of interest or dividends.A stock market is a public market for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. The stocks are listed and traded on stock exchanges which are entities of a corporation or mutual organisation specialised in the business of bringing buyers and sellers of the organisations to a listing of stocks and securities together. The stock market in the United States is NYSE while in Canada; it is the Toronto Stock Exchange. Major European examples of stock exchanges include the London Stock Exchange, Paris Bourse, and the Deutsche Bourse.The stock market I had to use for this assignment was the FTSE 100. What is the overall performance of your stock investment? Please critically review the variation of your portfolio’s constituent and value. Any particular events significantly affected your investment profits? I invested in 3i Group, Bp, Prud ential and Sainsbury’s. Once I submitted the third submission I decided to sell these’s shares as they kept falling; i did not want to lose any money at the time I thought I was making the right choice due to what was being reported in the news.Over the three months the share price fell/rose by x%. This compares with an overall rise of y% for the FTSE100. I made ? 2500 losses for the shares I invested, because BP petrol is expensive; because the price of petrol is more than ? 1 per litre consumers has not got money anyway because they have been made redundant. Consumers need petrol or diesel; if they can purchase this at a cheaper price but still get the quality then that is what they will do. The competitor is shell as there petrol is cheaper and of better quality. Prudential share price falls buy 20%. Reference (http://www. oneymarketing. co. uk/pensions/prudential-share-price-slumps-20/1007734. article). 3i Group Reference for Article http://www. thisismoney. co. uk The highest risers during the period were shares in hindsight such as; insurance,clothes and food industries. I can see that the company I chose might not have been going to perform as wells shares in other sectors; this is because unfortunately the companies I chose to invest one was getting taken over towards the end of the three months (Prudential) before this happened consumers sold there shares resulting in it falling by 20%. i Group is a smaa company that invests in new businesses that are starting out; obviously the businesses that 3i group have chosen haven’t taken off as much as 3i Group would have wanted them too. The recession is still recovering, therefore it will still affect some stocks in the stock market If I could start over again, I would have invested in the supermarkets that are more known than Sainsbury’s; such as Asda and Tesco. Then I would have bought shares in Cadbury’s and Next. I would have definitely have picked Cadburys as they are now owned by Kraft at one stage the share price increased up to 746p.I would have made a profit on the money I had invested. Suppose that you can do your stock investment again, what would you do differently this time? What kind of economic factors and investment techniques would you consider? And why? If I could do my stock investment again I would have looked at the different investment techniques to support my chose such as this website; http://stocks. about. com/od/evaluatingstocks/a/063009error. htm. It gives an explanation in details what techniques I could have used and what information it would give me so that i could make an informative decision.I am 100% sure that if i did this I would have made a profit not a loss on the company I chose. At the time I thought I made the right choice but now I think it was a gamble; I could have had a bigger loss than ? 2500. I know now there is more to it that picking some companies and buying shares. There was a variety of websites that I could have visit that would have made my stock investment profitable and different financial ratios I could have used; the tools of Fundamental Analysis Stock Market – Reflective Journal Started on Thursday 15th October @ 9. 00pmI logged onto Digital Look my first thought was the first company I am going to buy shares in will be Sainsbury's because they are at the highest in the FTSE 100 table. But then I thought I need to be smart, a lot of money could go down the drain so, I am going to do some more research look at what is happening in the 3 months or more, not just with Sainsbury's but with other companies as well. Friday 16th October 2009 @ 9. 00am Logged onto the Financial Times website to have a change from the first one. I still have not decided what companies I am going to choose, or how many shares I am going to buy.Today I have decided I am going to do some research and have a close look to see if there is any important information in the news and see if there ar e a any articles that are relevant and that could give me an idea what company not to go for as they may be in trouble. 3/11/2009 Watching BBC News Was watching the news when I got back from university. I heard something about share prices were down 10%. I was hoping it was not my four companies that I chose. Theses were Sainsbury's, BP, Prudential and 3i Group. Thankfully it was BGS group. Royal Bank of Scotland and Lloyds Tsb are forced to sell off their branches.BGS group said some companies that have loads of money can borrow as much as they want, but the thing is there is no demand. This was the day I decided its times to keep an eye on my shares, to see what their doing, are they falling or increasing? Am I making a profit or a loss? Do I need to sell my shares? Buy more or hold on to them. I have invested ? 50,000 and I would like to make a profit on it, even if it is a small amount. 7/11/09 Today I looked at my four companies, 3i, BP, Sainsbury's were all down 3i group was i n the top fallers so I felt a bit disappointed but, Prudential was up today which I was pleased about.I have invested the most in this company and have taken on a bigger risk, I cannot afford to lose my money. What I have decided to do is set up a spreadsheet on excel and keep a daily track of what's going on with my shares up until the next submission date. With the other companies I was going to check my share price and make a decision. Today I will do some research and see what I can find about the companies I have chosen. I may buy the financial times and try to get an in depth understanding of what is happening in the market. I didn't buy the Financial Times but I looked on the digital look website and they said:The supermarket chain Sainsbury's half year results on Wednesday, having already worked out that it is unlikely to be able to maintain its impressive sale growth due to the effects of a reduction in inflation. After reading this on Monday 9/11/09 I am going to sell my s hares especially if they have fallen again. I will keep track of this in my spreadsheet. Monday 9/11/09 I checked the share prices today and I am pleased that all my share prices have gone up, even though I am still making a loss of ? 1180. This has improved from Saturday.I have lost a bit on Sainsbury's but not enough to sell my shares. Today I have decided not to sell my shares, I am still going to take the risk and hopefully make myself some money. I will check the paper and see if there is any information about my companies. I may be able to get an incline on what's going to happen. I will give my Sainsbury's shares a couple of days and check on Friday just to give this company a chance to improve. I believed Sainsbury's will continue to decline, so just to recap on Friday 13th November 2009 if Sainsbury's shares have gone down I will sell them. Tuesday 10/11/2009I didn't get chance to check my shares today, as I said yesterday I am giving Sainsbury's a chance and as for the oth er companies I may as well check them all together. Thursday 12/11/2009 I read in the Metro paper this morning I the business and finance section Sainsbury's has reported on a 18. 5% rise in the past six months but warned sales could slump in the next half. The grocery chain posted healthy profits of 307m after like for like sales rose 7% in the 28 week to October. Share price rose 2 percent after the profit figure increased, Sainsbury's emerged as a winner in the recession as it tempted customers away from Tescos and Asda.This was lead by advertisers feed for a fiver. According to Nielsen Sainsbury's sale increase was the lowest out of the big four chains. Sainsbury's faces a tougher challenge to maintain the sharp rises in sales over the past year as food prices ease back. Sainsbury's are hoping to compete in other areas. Friday 13/11/2009 I was willing to take a risk as risk is associated with money. In the news Sainsbury's said they will not be able to generate sales growth like last year because of a fall in inflation The share price today is 339. 30 its has fallen by 1. 0p which is a 0. 03% decrease, so I have decided to sell my shares. The information that I found out yesterday confirmed for me its time to sell my shares otherwise it will continue to fall I will continue to make a loss and eventually lose my money, that is a risk I am not willing to take. So I sold my shares today at a price of 339. 30 @ 2000 shares equals to ? 6780. 00. So I haven't lost any money on these shares because on the 26/10/2009 the share price was the same 339. 30p. Monday 15/11/2009 I now have 3 companies the shares have gone down but still continue to grow.I will not sell these shares but will continue to hold them until the end. I feel that I will make a profit on one of these three companies. 17/11/2009 Today all of my shares have increased except for BP they have fallen (0. 40% which is 2p so it isn't to bad) 18/11/2009 Great day all of my have gone up I'm not sure if I have made a profit yet as I need to refer to my reflective journal spreadsheet this is where I keep, well try to keep a daily record of my shares and whether I have made a profit or a loss. Did some research today as I wanted to know the reason behind Prudential, as it is doing so well.I looked at www. investcorp. co. uk Stock Market News and Share prices and they said: Insurance giant Prudential was one of the major risers after a price target upgraded from the Dutch broking group ING. They have upped its target price from 392p to 584p, but maintaining its `hold' rating for the shares. For me this proves my investment is a risk but its a great company choice. The saving grace of Prudential is its exposure to emerging markets through ING. This is reflective in the current share price. 19/11/2009 Checked my shares today and updated my spreadsheet.Had a look at Sainsbury's even though I sold my shares I still like to have a look to see what was happening, and also it makes me feel so much better if they continue to fall, that means I have made the right decision. I will be keeping Prudential I feel this company is the one that will make me a profit. BP and 3i Group is growing steadily. 20/11/2009 Checked my shares again 2 of the companies have fallen, Prudential has risen that I am pleased about hoping I will make a profit. 31/03/2010 I have sold my shares and made a loss of ? 2500.